Let’s face it: the vast majority of investors don’t have time to actively trade.
Sure, buying and selling high-volatility stocks with perfect timing can pay you handsomely. But the amount of research that goes into it makes it almost a second job. For this reason, many investing experts — including Warren Buffett — have recommended investors go the passive route. Traditionally, that has meant buying low-fee ETFs like Vanguard’s S&P 500 Index ETF.
It’s true that buying ETFs is a reasonably low-cost way to achieve “average” returns while sitting on your investments forever. But it’s not the only way. If you buy high-quality stocks in government-regulated industries, you can enjoy the laid-back pace of passive investing while possibly getting market-beating returns. You’ll also spare yourself the fees that come with ETFs — which, in some cases, are not insignificant.
If this is something you’re interested in, the following two stocks may fit the bill.
Canadian National Railway
Canadian National Railway (TSX:CNR)(NYSE:CNI) is a railway company that makes money by shipping freight across Canada and the United States. Its rail network reaches three coasts, giving it an incredible reach and an “economic moat” in the area of long distance rail shipping. The company mainly ships grain, coal, and petroleum products. Its petroleum business is doing particularly well, having grown at 28% year over year in the most recent quarter.
Overall, revenues increased 9% in the quarter, while adjusted diluted EPS increased 15%. CN Railway stock pays a dividend that yields about 1.8%. This is a little on the low end, but CN tends to raise its dividend year in and year out, so your yield may increase over time.
Fortis
Fortis (TSX:FTS)(NYSE:FTS) is Canada’s largest private utility company. With assets across Canada, the U.S., and the Caribbean, it has a highly diversified rate base. Approximately 94% of Fortis’s earnings come from regulated utilities, which means that it enjoys a highly stable and diversified revenue stream.
However, the company isn’t entirely a zero-risk cash cow: in a recent quarter, the company lost earnings in its Aitken Creek business. With that said, these financial swings aside, the company’s operating results are solid, stable, and dependable.
One of the biggest positives about Fortis is its uninterrupted 45-year track record of raising its dividend. This is the longest continuous streak of dividend increases on the TSX and a testimony to Fortis’s reliability.
In the past, Fortis averaged dividend increases of about 10% per year. Going forward, management is aiming for a more modest 6%, which is still quite good.
Because Fortis’s business is so heavily regulated, it enjoys massive barriers to entry and can be counted on to deliver steady earnings. The stock pays a dividend that yields 3.44% at current prices, with the payout very likely to increase in the years ahead.
